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Unformatted text preview: Hw2 Solutions1. (4.3) Simple interest is earned only on the principal. Interest earned = 1,000 x 2.5 x 0.08 = $200 Future equivalent = 1,000 + 200 = $1,2002. (4.9) Find F given P. P = $400, N = 40 years, i=9% per year. Amount in account, F = P (F/P, 9%, 40) = 400 x (1.09)40 = 400 (31.4094) = $12,563.773. (4.13) Find P given F. F = $10,000, N = 10 years, i= 5% year. Deposit, P = F (P/F, 5%, 10) = 10000 / (1.05)10= 10000 (0.6139) = $6,1394. (4.17) Find N, given all other factors. P = $1,000, i= 15% per year, F = 4P = 4,000. Recall F = P (1+i)NHence N = log (F/P) / log (1+i) = log (4)/log (1.15) = 9.92 years 10 years5. (4.27) This is a case of find F given A. A = 1% of $20,000 = $200, i= 5%, N = 15 years Saved amount, F = A (F/A, 5%, 15) = 200 (1.0515 1) / 0.05 = 200 (21.5786) = $4315.726. (4.38)Find A given F. F = $150,000, N = 20 years, i= 9% per year So A = F (A/F, 9%, 20) = 150,000 x 0.09 / (1.0920 1) = 150,000 x 0.0195 = $29257. (4.56) This question is different in that we are dealing with 2 annuities. As we did in class, we This question is different in that we are dealing with 2 annuities....
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This note was uploaded on 11/13/2011 for the course IE 343 taught by Professor Vincent,g during the Fall '08 term at Purdue UniversityWest Lafayette.
 Fall '08
 Vincent,G

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